Auto Finance

1.8 Million Off-Lease Vehicles Returning to the Market in 2016, Experian Reports

April 5, 2016
• by Staff

LAS VEGAS — According to a new study from Experian Automotive, leasing as a financing option for new vehicles has grown by 76% since 2008. Based on that finding, the credit reporting agency said 1.8 million off-lease vehicles will return to the market by the end of the year.

The top three demographic areas, according to the study, with vehicles coming off lease are New York, Los Angeles and Detroit.

“With such a large volume of vehicles coming back into the market, consumers, dealers and lenders will want to better understand the options available to them so they are able to take action,” said Melinda Zabritski, senior director of automotive finance for Experian. “Whether it is deciding to lease again or buy used, restocking inventory or marketing to potential borrowers, gaining insight into these trends will provide the knowledge necessary to make smarter decisions for all parties involved.”

In contrast to that, comparing vehicles currently being leased to those coming off lease shows that the amount of leased full-size pickups and entry-level sport utility vehicles has grown by 56% and 79% respectively.

“As vehicle prices have been on the rise, we have seen consumers using several tactics to keep their payments more manageable. Leasing over the past several years has grown as consumers are drawn to the lower monthly payment,” Zabritski says. “What’s interesting, however, is that the types of vehicles are changing. Instead of fuel-efficient hybrids, consumers now are leasing full-size pickups, SUVs and CUVs. So, what happens three years from now? Will gas prices be what they are today, or will dealers have a more difficult time moving these types of vehicles when their leases mature?”

AAA analysts say bigger price tags and higher interest rates have conspired to raise American new-car buyers’ average annual total cost of ownership to $9,282, an all-time high and a 24% year-over-year increase.

Mark E. Rooney, an attorney whose practice focuses on consumer litigation defense and government investigations in the financial services industry, has joined the Washington, D.C., office of Hudson Cook LLP.

National Automobile Dealers Association officials have told the FTC that proposed new provisions to the Safeguards Rule may be unnecessary and could cost smaller dealers more than $400,000 in the first calendar year of enforcement.

Experian’s Q2 auto finance report consumers continue to uncover ways to manage monthly payments. For a record percentage of prime borrowers, that meant passing on a $32,000-plus new-vehicle loan in favor of a pre-owned unit.